Tuesday, 04 March 2014 06:23

Counterfeit mobiles ‘cost $6 billion a year’

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Dodgy phones for sale in Kenya Dodgy phones for sale in Kenya

Black market sales of counterfeit and substandard mobile phones are a US$6 billion a year problem, says a new report into the global counterfeit phone market.

Research from the Mobile Manufacturers Forum (MMF) says around 148 million counterfeit or substandard mobile phones were sold worldwide in 2013, mostly in developing countries.

“They were sold through visible retail sites, unofficial retail outlets, online auction websites and in local black markets,” said MMF secretary general Michael Milligan. “With the average knock-off phone selling for around US$45, our conservative estimate of US$6 billion in illegal sales represents a massive financial loss for governments and the mobile phone industry.

“Governments can combat the growing counterfeit phone problem with new technology which can identify substandard devices on the mobile network and permanently block users who don’t change to a genuine product.”

The MMF’s report, the result of over a year’s worth of analysis of the issue with participation by all the major brands of cell phones, shows that in India alone counterfeits make up more than 20% of the mobile phone market.


“That costs the industry US$1.5 billion annually in that country alone in lost sales. It also costs the government US$85 million in direct tax losses and around US$460 million in indirect tax losses.”

Milligan said that in September 2012 the Communication s Commission of Kenya disconnected mobile service to around 1.5 million counterfeit devices using network blocking technology. “Counterfeit phones are made with cheap substandard materials and have been shown to contain dangerous levels of metals and chemicals like lead up to 40 times higher than industry standards.

“These substandard devices run on inferior operating systems and there have been reports of fraudulent applications which, when downloaded, collect and send your sensitive and personal data to criminal gangs. Also, because black market phones are not tested for compliance with industry and national standards, they suffer frequent call dropouts and put a strain on the mobile network by degrading coverage, call quality and mobile Internet speeds for all users.”

The MMF report said lab tests on more than 50 counterfeit devices found that most failed basic compliance tests against industry standards for network connectivity, which translated into a very high percentage of call dropouts for users. The research found network coverage was significantly reduced as more substandard devices connected to the network, which created coverage black spots that could only be fixed by installing 80% more base stations.

Milligan said people often unknowingly purchase fake or substandard mobile phone products on the Internet when trying to find a cheaper price. He urged all consumers to visit the website (www.spotafakephone.com) set up by genuine manufacturers to help consumers identify and avoid potentially dangerous fake or substandard mobile phones, batteries and chargers.

“Shoppers need to be careful when searching on the internet for a new mobile phone or replacement parts because most counterfeits steal the designs and trademarks of genuine products to deliberately deceive consumers,” Milligan said.

Other substandard fakes may not infringe copyright and appear to be legitimate competition to genuine models, but they are often produced without government approval, testing or certification and can quickly break down with potentially dangerous consequences.”

Milligan said some of the tell tail signs of counterfeit mobile phone products were:

  • IMEI Number. Every genuine mobile phone has a unique serial number to register it to a carrier network. Counterfeit s often have duplicated or invalid IMEI numbers.
  • Price. If the price sounds too good to be true, then it probably is.
  • Poor quality. Look for inaccurate printing, misspelled words, crooked label placement and signs of defective workmanship.
  • No warranty. All genuine mobile phone manufacturers offer a limited warranty that covers the handset, software and accessories. Most black market products don’t.

Milligan said to avoid fakes consumers should always buy mobile phone products made by registered manufacturers and sold by trusted retailers.


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Graeme Philipson

Graeme Philipson sadly passed away in Jan 2021 and a much valued senior associate editor at iTWire. He was one of Australia’s longest serving and most experienced IT journalists. He is the author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’He was in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism. Graeme will be sadly missed by the iTWire Family, Readers, Customers and PR firms.

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